**Question:**How much money will be in the bank account at the end of 4 years if $5000 is deposited at the end of each year? The interest rate is 12% compounded monthly.**Solution:**To calculate the future value of the bank account, where regular deposits are made, and interest is compounded monthly, the Future Value of an Annuity formula can be applied. Here's how you can determine the total amount:1. **Identify the Rate and Time Period:** - **Interest Rate (r):** 12% per year, or 1% per month (12%/12). - **Time (t):** 4 years = 48 months. - **Deposit (PMT):** $5000 at the end of each year.2. **The Formula:** Use the future value of an annuity formula: \[ FV = PMT \times \left(\frac{(1 + r)^n - 1}{r}\right) \] where: - $FV$ is the future value of the investment - $PMT$ is the deposit made at the end of each period - $r$ is the monthly interest rate - $n$ is the total number of compounding periods3. **Apply to Each Deposit:** - Since deposits are made annually but interest is compounded monthly, adjust calculations for each deposit: - Calculate for each $5000 deposit separately and sum them up to get the total future value at the end of 4 years.By following these steps, you can calculate how much total savings will be in the account at the end of 4 years.

Future value: It implies to the value that an investment will carry at some point of time in future…

Answered: How much money will be in the bank…

How much money will be in the bank account at the end of 4 years if $5000 is deposited at the end of each year? The interest rate is 12% compounded monthly.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

You deposit $500 each month for four years. How much will be in the account after the four years if the interest rate is 4% monthly?
How much do you have to deposit today so that beginning 11 years from now you can withdraw $12,000 a year for the next 6 years (periods 11 through 16) plus an additional amount of $24,000 in the last year (period 16)? Assume an interest rate of 9 percent.
If you want to have $7700 at the end of 9 years, how much money you need to deposit today into an account that pays 9.0% interest per year, compounded monthly?
How much do you have to deposit today so that beginning 14 years from now you can withdraw 15,000 a year for the next 4 years (periods 14 through 17) plus an additional amount of 30,000 in that last year (period 17)? Assume an interest rate of 11 percent.
How much would you need to deposit in an account now in order to have $4000 in the account in 5 years? Assume the account earns 7% interest compounded monthly.
Your car loan has monthly payments of $295 for the next 5 years with the first payment due today. If the annual interest rate is 5.16%, what is the value of the payments today?